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Tuesday, December 02, 2014

Gold prices see a massive rebound on Monday

Yellow metal prices hit a five-week high 


Bullion prices ended higher on Monday, 01 December 2014 at Comex. Gold prices saw a massive rebound on Monday and hit a five-week high, after prices overnight scored a three-week low. The huge daily trading range in gold prices was the largest in years. The increase in the yellow, precious metal, viewed as a haven asset, was spurred, in part, by a downgrade of Japan's sovereign debt rating and a retreat in the dollar. 

Gold for February delivery jumped $42.60, or 3.6%, to settle at $1,218.10 an ounce.
March silver SIH5, -2.23% surged $1.14, or 7.3%, to $16.69 an ounce. 

Several factors worked to support gold Monday, including heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market. A weaker U.S. dollar index and a bounce in crude oil prices Monday and even some safe-haven demand--were also featured to start the trading week and the first trading day of the month. 

World stock and commodity markets were under pressure early Monday following Friday's major collapse in crude oil prices—the day after an OPEC meeting that failed to produce production cuts by member nations. January Nymex crude oil prices dropped to a five-year low of $63.72 a barrel in overnight trading. However, as the U.S. day session began many markets recovered from their lowest price levels seen in overnight trading. The recovery in crude oil prices spilled over into buying in many other commodity markets. 

News that Moody's cut the Japanese government's credit rating was credited with prompting some safe-haven demand for gold, especially from Asian investors. 

In other overnight news, the Euro Zone's manufacturing purchasing managers index (PMI) came in at 50.1 in November from 50.6 in October. A reading of 50.4 was expected. A reading below 50.0 suggests contraction. Focus of the market place is on Thursday's regular monthly meeting of the European Central Bank. The ECB says its read to implement further monetary stimulus measures to boost the ailing EU economy. The central bank could make a move at Thursday's meeting. 

Meantime, China's manufacturing PMI came in weaker than expected in November, at 50.3 versus 50.8 in October, which is an eight-month low. This report also helped to pressure Asian markets. 
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